IBM Says Small Deals Lead Technology Consulting Rebound

According to executives at IBM and Accenture, technology consulting services are starting to feel the rebound, but smaller deals rule.

IT consultants are probably already feeling it: the start of a rebound in business. But there's a difference this time. The rebound is coming mostly in smaller deals rather than in gigantic ones.

That may be because businesses are dipping their feet in with jobs that just can't wait before they dive into a recovery of which the depth is still uncertain.

Case in point—IBM's (NYSE:IBM) and Accenture's (NYSE:CAN) recent comments on their consulting businesses. Talking about its overall quarterly results, IBM said smaller deals are leading the day, both in services and software.

"Smaller deals are a significant portion of our total revenue stream, but I think what we are seeing in smaller deals [has] been more characteristic of a leading indicator," IBM Chief Financial Officer Mark Loughridge told financial analysts during a conference call discussing IBM's quarterly results. "So as we entered the recession those smaller deals produce a little more aggressively than we see them coming back, especially at the end of the quarter."

At the same time larger deals tended to get rolled into the next quarter, Loughridge told analysts.

Accenture Chairman and CEO Bill Green offered a similar story to analysts during his company's quarterly conference call at the end of 2009.

Technology vendors acquired technology consulting companies at a quick pace in 2009, including ACS and Perot Systems. Click here to see how these acquisitions fit into the M&A landscape in 2009.